Midweek Markets: Great Growing Conditions Push Down Prices

With growing conditions the best they've been in two decades, according to USDA's latest report, farmers and analysts are expecting bumper crops—and still softening prices—in the months ahead, especially for corn.

"If the weather forecast for the next two weeks is correct, we are looking at a record crop" of corn, Dan Basse, president of AgResource in Chicago, told AgWeb. "There have been years in which the average yield was 14% to 15% above trend, so we could see an average yield as high as 180 bu. per acre."

The news continues to put price pressure on corn, pushing it to $4.41 a bu. earlier this week, and some say prices could fall as low as $3.50 per bu.

"Hong Kong is already the fourth largest market for U.S. beef and beef product exports, with sales there reaching a historic high of $823 million in 2013," said Vilsack, who called the change "great news" for American beef producers. "We look forward to expanded opportunities there for the U.S. beef industry now that all trade restrictions are lifted."

Before Vilsack's announcement, the Hong Kong market had been off-limits in various ways since 2003 to American beef producers, due to concerns about a few cases of bovine spongiform encephalopathy (BSE).

The same strong growing conditions for corn have also benefited soybean crops. According to USDA, U.S. farmers will produce a record 3.635 billion bushels in 2014, with yields of 45.2 bu. per acre. The pricing outlook for soybeans, however, remains murky, with average prices expected to be between $9.75 and $11.75 per bu.

(Rain hurts wheat crop quality when it falls on ripe grain, typically lowering the amount of flour that can be produced.)

But an uptick to $5.96 per bu. for September delivery is still far below the May high of $7.44 per bu. Then, prices were jumping due to global concerns about the political situation in Ukraine, which is one of the largest producers of wheat in the world, with 9.5 million metric tons expected to be exported this year, according to USDA. Many expected that this spring's conflict between Ukraine and Russia could affect its ability to export its grain, but so far that has not happened.

"From a producer's standpoint, it feels like without a major geopolitical twist of some sort, wheat is going to continue following corn prices in an effort to compete for feed demand," observed Kevin Van Trump of Farm Direction. "If the weather stays favorable and the U.S. corn crop pushes above 14.0 billion bushels (which looks to be the case right now) it will be tough for wheat to trade much higher, at least from a near-term perspective."